There is simply no denying that the world has changed in the past year. Although the digital transformation of society was already underway and even accelerating, requests to stay at home in 2020 and the consequent urgent need to convert a large number of jobs into remote work positions have led many companies to adopt cloud computing solutions for the first time.
Once companies experience the convenience that comes with employees being able to access their applications, data and platforms from anywhere, there is simply no turning back. And the list of products and services available in the cloud is long and growing. The cloud computing market, which reached about $ 371 billion in 2020, is expected to reach $ 832 billion by 2025.
Naturally, investors are looking for the best ways to capitalize on this opportunity and take advantage of the growing wave of cloud adoption. These three companies offer their shareholders clear opportunities to profit from the trend.
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1. NVIDIA: the leading choice of data centers worldwide
While NVIDIA (NASDAQ: NVDA) it might not look like a cloud computing company at first glance, you would have to search everywhere to find a large data center that doesn’t use its cutting-edge processors.
Almost all of the world’s leading cloud providers turn to NVIDIA graphics processing units (GPUs) to help them process data. The list includes Amazonin (NASDAQ: AMZN) AWS, Alphabetin (NASDAQ: GOOGL) (NASDAQ: GOOG) Google Cloud, International Business Machines‘IBM Cloud, Microsoftin (NASDAQ: MSFT) Azure, and Alibaba Cloud – and that’s just the big dogs. Many smaller operators also rely on NVIDIA GPUs to maintain data flow.
Why NVIDIA? Its state-of-the-art GPUs have unparalleled parallel processing capabilities, which allow you to handle multiple complex mathematical calculations simultaneously. It turns out that this ability is not only the key to rendering realistic images in video games – it is also the best solution available to power AI systems and support cloud computing.
During the first nine months of 2020, NVIDIA’s revenue grew an impressive 49% year after year. However, its data center segment, which provides processors for cloud computing, data centers and AI, grew 138% over the same period – and this could be just the beginning.
Given the widespread adoption of cloud computing and the need for the company’s GPUs to power the servers that support it, NVIDIA has a long and prosperous track ahead.
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2. Atlassian: helping remote teams reduce the divide
A by-product of last year’s upheavals is the growing recognition that increased remote work will survive the pandemic. In fact, 74% of CFOs say their companies intend to transfer at least some employees to remote jobs permanently, according to a survey by Gartner. As a result, teams will continue to need effective tools to help them collaborate over long distances.
This and where Atlassian (NASDAQ: TEAM) comes. It provides a cloud-based platform that serves the increasingly decentralized world of work, allowing colleagues to not only communicate in real time, but also collaborate on assignments, delegate tasks, share content and manage projects. The Atlassian Marketplace also offers more than 4,000 third-party applications to personalize the experience and has recently surpassed more than $ 1 billion in lifetime sales.
In its first fiscal quarter, which ended on September 30, Atlassian’s revenues grew 26% year over year. Perhaps more importantly, its subscription revenue – driven mainly by cloud-based products – grew by 38%. These solid financial results were the result of solid customer gains. It added 8,620 new net customers in the quarter, totaling 182,717. Year after year, that number grew by 14%. This customer base includes an impressive 83% of the companies that make up the Fortune 500.
Atlassian is located at the intersection of three huge and growing markets: software, IT management and general work management. This combines to create a total addressable market for the $ 24 billion company. Given Atlassian’s 12-month revenue of just $ 1.7 billion, it should have many opportunities for continued growth ahead.
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3. Amazon: pioneer and still the queen of the hill
It is difficult to have a discussion about cloud computing without talking about one of the pioneers in the field: Amazon. When Amazon Web Services (AWS) was launched in 2006, it became the first to offer an infrastructure as a service (IaaS) platform, a precursor to modern cloud computing. The company had the market to itself for several years and continues to dominate the space to this day.
At the end of 2020, Amazon controlled about 32% of the cloud infrastructure services market, with Microsoft’s Azure and Google Cloud in second and third place, with 19% and 7%, respectively, according to compiled data. market analyst Canalys.
It is difficult to overstate the importance of cloud computing for the technology giant. In the first nine months of 2020, AWS accounted for almost 13% of Amazon’s revenue and 62% of its operating profits, while generating operating margins of more than 30%.
These cash flows and profits helped to finance much of the expansion of other Amazon business segments. This is especially true for its international e-commerce operations, which still operate around the break-even point.
Even 15 years after its debut, AWS continues to expand at a remarkable pace, especially considering its size. In the first nine months of 2020, AWS grew 30% over the previous year.
Given the acceleration in the adoption of cloud computing that resulted from the pandemic, don’t expect Amazon’s gains in this area to stabilize anytime soon.